Canada is developing plans to impose tariffs on American products if US President-elect Donald Trump follows through on his promise to impose a 25% tariff on Canadian goods.
Bloomberg writes about this, citing sources familiar with the matter.
According to government officials, tariffs could be imposed on a broader list of American goods than during the trade disputes in 2018, when Trump was first president of the United States.
Then Canada imposed tariffs on American bourbon made in Kentucky. The trade dispute ended after the US, Mexico and Canada agreed to renegotiate a regional trade agreement.
This time, Canada wants to raise tariffs, specifically on orange juice from Florida. Canadian officials are also circulating a list of nearly every American product that Canada exports from the US, but it wonʼt be made public until Trumpʼs exact intentions are clear.
Canada wants to act on the principle of “dollar for dollar”. But one of the officials Bloomberg spoke with said that in the worst case, if Trump imposes tariffs on all Canadian exports to the United States, such a scheme will not work. The government of Canadian Prime Minister Justin Trudeau is studying all options to hurt American exporters, Bloomberg writes. One of them is to impose tariffs on strategic US goods, including oil, uranium and potassium. At the same time, Canada hopes to avoid a trade war with the United States altogether.
According to calculations by economists at the Bank of Nova Scotia, if the US imposes a 25% tariff, Canadaʼs gross domestic product will fall by 3.8%. And if Canada chooses "full retaliation", that is, imposes taxes on all US goods, these costs will reach 5.6% within a few years.
Canadian officials expect that even if Trump does not go down the path of imposing all tariffs, he will still try to limit Canadian exports in some way. In particular, they are considering the 2018 “scenario”.
- Canada is the worldʼs largest national importer of American goods. In the first 11 months of last year, the country imported $320 billion worth of goods from the United States — while the EU bought $341 billion worth of American goods during the same period.
- US President-elect Donald Trump promises to impose tariffs on goods from China, Mexico and Canada on his first day in office.
- During Trumpʼs first term as president, the United States and China were embroiled in a trade war. After Trump took office, the two countries raised tariffs on each otherʼs goods. Trump accused China of "unfair trade practices" and imposed tariffs on foreign goods, believing that doing so would help American manufacturers.
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